Digital Gold : Bitcoin and the Inside Story

Nathaniel Popper, from New York Time, recently published a book called « Digital Gold : Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money », a very long investigations on bitcoin origins. During his investigations Nathaniel has managed to have access to a conversation between Satoshi Nakamoto and the developer Laszlo Hanyecz which was the first to experiment the GPU mining.

How did the man who spent nearly 10 000 BTC for a pizza manage to mine so many Bitcoins? The answer is pretty simple, in april 2010, Laszlo Hanyecz was the first one to use GPU mining which gave him a very large advantage over any other CPU miners. For many days he was able to mine an average of nearly 100 BTC’s an hour.

When Laszlo finally told Satoshi Nakamoto about his method he received the following answer ;

A big attraction to new users is that anyone with a computer can generate some free coins. When there are 5000 users, that incentive may fade, but for now it’s still true. GPUs would prematurely limit the incentive to only those with high end GPU hardware. It’s inevitable that GPU compute clusters will eventually hog all the generated coins, but I don’t want to hasten that day. If the difficulty gets really high, that increases the value of each coin in a way since the supply becomes more limited. The supply is the same: 50 coins every 10 minutes. But GPUs are much less evenly distributed, so the generated coins only go towards rewarding 20% of the people for joining the network instead of 100%.

I don’t mean to sound like a socialist, I don’t care if wealth is concentrated, but for now, we get more growth by giving that money to 100% of the people than giving it to 20%. Also, the longer we can delay the GPU arms race, the more mature the OpenCL libraries get, and the more people will have OpenCL compatible video cards. If we see from the difficulty factor that someone is using too much GPU, we can certainly pick this OpenCL stuff up again then. Maybe my effort to maintain GPU innocence is running out of time. It’s worked out so far.

If you would like to know more about this book you can find it online on amazon or ebay.